1 THE PRIVATE OWNERSHIP OF PUBLIC SPACE: THE NEW AGE OF RATIONALLY PRICED ROAD USE BRIAN MICKLETHWAIT Economic Notes No. 49 ISSN ISBN An occasional publication of the Libertarian Alliance, 25 Chapter Chambers, Esterbrooke Street, London SW1P 4NN : Libertarian Alliance; Brian Micklethwait. The views expressed in this publication are those of its author, and not necessarily those of the Libertarian Alliance, its Committee, Advisory Council or subscribers. Director: Dr Chris R. Tame Editorial Director: Brian Micklethwait Webmaster: Dr Sean Gabb FOR LIFE LIBERTY AND PROPERTY
2 1 THE PRIVATE OWNERSHIP OF PUBLIC SPACE: THE NEW AGE OF RATIONALLY PRICED ROAD USE BRIAN MICKLETHWAIT CURRENT POLITICAL MOVES TOWARDS ROAD PRICING The alert newspaper reader in Britain, circa 1993, will have noticed that privately owned roads and road pricing are now serious politics. The public may think these notions as mad as ever, but apparently the government is in favour of such things. The reasons for this are very mundane, very politics-asusual. The government is in its usual stew about public spending, and about how to reduce it. Privatisation has been so popular with governments in recent years for one simple reason, namely that if the government sells something, it gets hold of lots of money. Failing that, it at least cuts down on the losing of it. It cuts public spending in other words. In the Daily Telegraph of February 10th 1993, we learn that the German government is planning to sell off its autobahns. Germany also wants to privatise its railways. The motive here is loss avoidance, for the German railway system is now in debt to the tune of 29 billion. If the government forgets about the 29 billion, then it might be able to sell or at lease give away the railways, and not run up any more such debts. So the plan is to sell off the autobahns and pay off the railway debt with the proceeds. And if anyone is to buy the autobahns, he has to be able to get an income from them, hence all the talk of pricing their use. The selling of roads and the pricing of their use, in other words, are ideas that many governments, including our British government, is eager to think about. Another reason for selling roads is that this might result in more infrastructure without what is now regarded as the inevitable price of new infrastructure, namely... higher public spending! Voters want more infrastructure, which they associate with jobs. But, the voters do not want to pay for this infrastructure. So, thinks the government, get the capitalists to pay for it. Which they will only do if roads can be turned into a way for capitalists to make money. If the politicians decide to keep the roads but charge for their use, they will make the same pig s dinner of them that they have already made of the railways. But even that would be an improvement over the transport mess we have now, if only because publicly owned but less irrationally priced roads would be easier for people to imagine in private hands in the future. And the third reason for road pricing is that it just might impinge upon that other great political imponderable, the urban crisis, otherwise known as the crisis of the inner cities. This crisis consists of lots of things, but two things it especially consists of is: traffic jams, and chaotic public transport. The usual answer to the urban crisis is, once again... ber-boom!... higher public spending. But what if you want fewer traffic jams and better public transport, without higher public spending? Road pricing will deliver both of these seemingly unattainable miracles. (Privately owned roads will deliver other even more significant inner city miracles, such as a dramatic improvement in public morals, but that is not my concern here. Here, I merely allude without elaboration to that particular miracle.) Road pricing will, alas, enrage millions of motorists too stupid to think through how necessary and wonderful it will be, just as increasing the price of food in the former USSR and its former imperial possessions has enraged people there. But you can t win them all. Most politicians these days will settle for not losing them all. Hence their willingness to settle for road pricing, despite its obvious political dangers. THE UNIMAGINABILITY OF PRIVATELY OWNED ROADS Public is a confusing word. On the one hand it means places used by the public, and on the other hand it means things that are merely owned by the public. Many public places and spaces, such as cinemas, restaurants, pleasure gardens and shops, are privately owned, while great swathes of the public sector are surrounded by impenetrable barbed wired barriers to keep the supposed owners out. Maybe it is this word public which makes it so obvious to everyone except me and my free marketeering friends that the roads along which the public travel must necessarily be publicly owned. It isn t just that most people oppose the private ownership of roads; almost all of the public assume that by their nature roads have to be publicly owned. The question of whether they should be publicly owned is, for them, too bizarre even to ask. Why question what, by the nature of things, cannot be otherwise? But what if roads were not publicly owned? What if there existed a parallel universe to our own, identical in all respects save one, namely, that privately owned roads were as much part of the regular order of things as publicly owned
3 2 roads are in our own universe? What if hiring a piece of road from a road operating capitalist was no more unusual a practice than hiring a video is now? What would happen? I will spare the reader any pretence of impartiality and declare at once that I believe that this parallel universe would be a colossal improvement quite literally an epoch making improvement upon our own. THE RIGHT TO BUY AND SELL ROADS So, my turn-of-the-millennium God of Transport has waved his magic wand, and all roads are privately owned. Some roads are owned by greedy capitalists, thinking only of money. Other roads are the property of poorer, more public spirited institutions like local community groups, more concerned about their notion of the public interest than merely to pile up the cash. We can t know for sure what would happen, but I suppose a rather trivial first development would be that many of the public spirited road owners would reckon that although they could do much good by operating their roads in the public interest, they might do even more good with whatever cash they could get by selling their roads. Ownership most definitely, in my proposed parallel universe, includes the right to sell, as ownership, properly understood, always does. But let s get stuck into the more interesting stuff. If step zero is an inevitable flurry of buying and selling, along the lines of the vigorous trading that follows one of the more orthodox privatisations of recent years, step one would presumably be the attempt to charge, in some way or another, the users of the roads. Not all the roads would remain economic. If their use became costly enough to persuade the owners to keep them as roads, that might be too costly for the motorists. So, those roads would be turned into other things. But what of the roads that would remain? Clearly, there would be many roads which would be so popular that it would be folly to neglect the economic opportunities of ownership. ROAD PRICING NOW: A DIGRESSION Before discussing how road use might be priced, consider how road use is priced now, in the mundane, traffic-jamridden universe we poor twentieth century souls must now grope about in. Motoring costs now take three forms. The government charges you a tax, once per vehicle-year. They charge a different amount according to what approximate size of vehicle you have, but they charge you the same amount however much or little you use your vehicle. Once you ve got your vehicle, in other words, the economic pressure on you, at any rate from this tax, is to use the thing, to justify the fixed cost of your tax. Second, the government taxes petrol. This certainly causes you to wonder if your journey is really necessary, but the bad news is that no distinction is made between burning petrol on a deserted road at half past three in the morning, or burning the same amount of petrol at the height of the morning rush hour five hours later. The price of petrol inflated by tax discourages motorists a lot from using roads when they are nearly empty, but discourages them no more when the roads are busy to the point of near gridlock. It is of the essence of my proposed parallel universe that these two methods of pricing should be replaced by road owners charging for road use. The so-called road fund should end. Each road owner would worry about his own road fund, and the government would charge no more tax on roads, cars, car ownership or car use, than it charges on fountains pens or gas cookers now. The only element of the present system for pricing road use that would remain would be that people would continue, in my proposed alternative universe, to pay capitalists for whatever vehicle they wanted, according to how much the capitalist wanted to charge for it. And, as now, they would pay other capitalists as and when they want their vehicles mended or insured. This is the only bit of the system that already works well, in the sense that motorists are rewarded for using resources efficiently and punished for wasting them. And to all vehicle lovers who imagine that it could not possibly work any better I say: read on! STOPPING YOUR JOURNEY TO PAY FOR THE RIGHT TO RESUME YOUR JOURNEY Back to my alternative universe. What sort of things would road owners do? It is obvious, at any rate to me, that road owners would want drivers to use their roads as much as possible, and would want to use different prices at different times, to maximise their profits from those times when roads are popular, and to encourage road use at the times when roads are not now popular. Road use would indeed be cheaper at three in the morning, and motorists will surely consider the opportunities this might open up for them. Sheer greed would guarantee such arrangements, just as it already causes such arrangements on the railways, provided only that, again as on the railways, charging for use happened continuously instead of in mere annual lumps. (There would be nothing to prevent road owners charging a fixed fee for a larger time span of road use, if that made sense to them. British Rail already supplies passes that last all year long. When charging by the year does still make sense, it can continue.) But how might the road owners contrive the mechanics of these more flexible pricing arrangements? An immediate answer that springs to mind is that the owners of a road might install toll booths, just as the government does already at the entrances to its more grandiose and recent estuary bridges. At each payment point, the road would widen out, like that snake that has swallowed a lager can in the 4X advert, and a great team of retired Royal Marines in white coats would collect up the cash. Slow. Cumbersome. And unless there were toll booths every half a mile, such a method would only work well on motorways, where each stretch of motorway between intersections would require only one such interruption. But maybe, on motorways, something like that would still be profitable. It would be a lot more profitable if some means could be devised of separating the motorist from his money without
4 3 stopping his progress, progress being, after all, what the motorist is paying for. So, suppose motorists were offered the same old clutch of ex-servicemen, but also an alternative, faster means of getting through each toll point. Instead of stopping and paying through the window, they could instead drive past a big bucket and simply chuck the necessary number of pound coins in, without coming to a stop. A robot could them permit or deny progress, on the basis of whether the coins had indeed been thrown in, were genuine, etc., in the manner of ticket machines at railway stations now. Still rather cumbersome. How does the robot know exactly which coins were chucked in by which car s occupants? Stop each car before each transaction? That would rather defeat the purpose of the exercise, which is to speed things up. But otherwise, how would it know which car to stop, and how would it do this? Bring down another barrier? THE EMERGENCE OF A STANDARD SYSTEM FOR PAYING ON THE MOVE But what if the motorist had some kind of gas-meter-like gadget attached to his car, from which the robot would extract money by some kind of late twentieth century, electronic, Barclaycard type of trick? That would really start to speed things up. No compulsion would be required. It would simply be that if you had the gadget on your car you d be able to make rapid progress, much more so that if you had to have regular sessions with the ex-service personnel. The gas-meter gadget, in other words, would be like the difference between a very fast engine and a very slow one. These gadgets would become, I surmise, popular. A battle of the gauges would ensue, during which the Volvo Standard, the IBM Standard, the Singapore Rules Standard, and the M25b/New Jersey Turnpike Configuration would vie for market dominance, and for a while the busier motorways might offer the motorist a choice between the most popular standards. Soon most vehicles would be able to travel without interruption on most roads. And pretty soon, also, any vehicle whose driver expected to be able to go on paying through his car window to another human in a booth would be disappointed. Such arrangements would inexorably be phased out. A dominant standard of interface between vehicles and roads would in due course emerge in the market, in the manner of IBM personal computers or VHS videos now. (Such a natural monopoly is often regarded as an excuse for the imposition of a real monopoly of the sort that needs no inverted commas, by the government. You will be relieved to learn that this piece of writing is not about the fatuity of such assumptions; it is about the rational pricing of road use. So we ll get on with our story, and leave the followers of J. K. Galbraith to their economically illiterate presumptions.) A standard has emerged. The machines for charging passing vehicles are, I would conjecture, buried in wires across the road. The wires can be buried as often as the road owner desires. The price imposed by each wire will vary according to a complex set of rules. Account will be taken of time of day, make of vehicle, and maybe even of such on-the-spot variables as speed of vehicle, and pollution behaviour of the vehicle, more about which below. The very occasional, very cumbersome charging of something like 5 would be replaced by a the more frequent debiting of vehicles by a lesser sum. The process of using the road to travel would no longer be interrupted by the process of paying to use the road to travel. Good for the motorists. Good for business. Lots of money to concentrate the minds of the road owners on getting it all to work well. The money involved would start to get serious. IT IS NOT TO THE BENEVOLENCE OF THE ROAD OWNER... So what if, encouraged by such seriousness, some road owners cheated? Whenever I speak to groups of people about things like road pricing, someone asks this. Sure, they may say that it only costs X, but what if instead they decide to charge 2X or 3X or 4X? What then? What would motorists do about that? Pretty much the same as what you do at Harrods now if they overcharge you there, or at the Bank. You raise a fuss, occupy a disproportionate amount of their time, urinate all over their brand image as best you can e.g. by writing to Esther Rantzen, and you generally try to spoil their day. If a road owner seriously annoyed you, you could get an old car and park it sideways on in the middle of one of his roads, and remove the sparking plugs. In other words, any road operator who tried to be clever and cheat, by ticking off more debits than promised or by any other means, would soon learn that cheating is not profitable. Motorists would switch back to the more primitive manual methods. Traffic flow, and with it cash flow, would suffer. If cheating got completely out of hand, the word would go around the motoring community, and motorists would seek entirely different roads, or go by train, or simply stay at home. Greedy capitalists who understand their own interests behave honourably towards their customers. What Adam Smith said about butchers and bakers would apply just as strongly to road suppliers. THE SPREAD OF THE STANDARD TO SMALLER ROADS: THE MORE FREQUENT CHARGING OF A SMALLER SUM It would now be much easier to apply the same principle to non-motorways, and that would duly happen. The wires could be stretched buried, surely at twenty or thirty yard intervals, and each wire could cost you a few mere pence to cross, and the wires could be buried across any road whose owners wanted to charge you anything. Only those who positively wanted you to use their road instead of a more direct route would desist from burying wires, and they d most definitely tell you all about their giveaway arrangements. I also anticipate that many motorists would insist on having a free passage over the pricing wires nearest to their homes. No problem. Some road owners might even be willing to pay motorists to use their roads, if the motorists were willing to run a gauntlet of capitalistic enticements of other kinds. Motorists are, after all, a rather splendid market.
5 4 As it happens, the technology for everything in this alternative universe already exists. It has been exhaustively written about by road pricing experts. (See my endnotes for further information about a few of such writings.) THE HONG KONG ERROR Major decisions about how and how not to distribute information around the system would have to be made. The advantage of the gas-meter-in-each-car idea is that the information about what the motorist owes would not need to be electronically centralised. The wires would merely broadcast their presence to the gas-meters, and the gas-meters would do all the calculating. In Hong Kong, where they have mighty traffic problems and where road pricing has already been attempted, they tried the central computer method, with the cars all waving their different electronic number plates at the same giant road meter, owned by the government. The Hong Kong version of Big Brother thus had a permanent and permanently updated history of the movements of all Hong Kong cars. The Triads the oriental Mafia immediately became fascinated, and if I remember the story correctly started to rob people on the basis of when their cars were on the road. There was also the question of what the People s Republic of China was going to do with such information, as and when it got its thieving Bolshevik hands on it. Partly because of the above, and partly because the government of Hong Kong continued to charge all their previous road taxes and car taxes, which was much resented, the citizens of Hong Kong put a stop to the scheme. THE INFLUENCE OF ROAD PRICING ON ROAD DESIGN AND VEHICLE DESIGN Okay so we each do have our own road meters, and there we all are, wizzing around from one road to another, clickclick-clicking. We re wizzing because us wizzing is better for business. And we re wizzing because some of us have been deterred by the cost of wizzing, which has left the roads emptier for those who really want to wizz, and are prepared to pay for it. The road use queues (we call them traffic jams ) melt away, in other words, as other queues are now melting away in East Europe, as a natural consequence of the introduction of a sane price system. Would all vehicles pay the same amount to cross each bit of buried wire? I think not. The roads in my parallel universe have got more complicated now, what with all these wires going this way and that, and they ve become very, very profitable. So I think we can state with confidence that the cost of switching everything off and mending the roads would be scrutinised with an altogether more exalted degree of thoroughness and calculational expertise than is the case nowadays. Therefore, the question of exactly which vehicles do exactly how much damage to exactly which sort of road surface would very quickly become the object of prolonged speculation in Road Owner magazine, and profitable road management would very quickly include learning how to charge very heavily those vehicles which threaten very heavy damage to your road. Should roads be made of indestructible concrete reinforced with vastly expensive strips of a new metal first used to make the heat shields of space rockets, and should the smoothness of the ride be the concern only of car makers? Or should roads be made very smooth and comfortable, and be advertised on this basis? Both, probably. Perhaps there d be specialised roads for goods haulage, rough, tough, indestructibly bumpy, a test for the macho skills of the truckers. And there d be other specialised roads like Grand Prix circuits straightened out for comfort seeking car drivers. Maybe something in between for most of us, such as we have now? Who knows? An accident in a busy city would be a financially very significant event, especially if there were medical complications. Successful road managers would accordingly learn how to dissuade unsafe looking vehicles, perhaps with differential prices according to degree of mechanical dubiousness, perhaps with outright bans. Much effort and cash would go into achieving more exact and more honest versions of the present MOT test. The safety records of rival road owners would be much discussed, in the manner of the safety records of rival airlines now. Airlines now are much, much safer than roads now. No prizes for guessing my explanation for this. On the other hand, a few people would actually like a bit of danger on the roads. Would they like it enough to pay for all the chaos and delay involved? They would at least get the chance to decide, once the price had been made clear to them. ROAD PRICING WOULD INCREASE THE SUPPLY OF ROADS A recent publication put out by a Labour Party think tank recommended road pricing, but warned sternly against any idea that the resulting income flows should be allowed to encourage anyone to supply more roads. Alas for vain hopes. The Labour Party includes people ready to support road pricing because their hatred of market forces is exceeded try to imagine how much hatred that must mean by their even greater hatred of the motor car. To the contemporary leftist the motor car ranks with the cigarette as a quintessential symbol of irresponsible individualism, thoughtlessly sacrificing the collective needs of the citizenry to the whims of the socially atomised motorist. Such leftists want to punish motorists for their habit as they already punish smokers. But if road pricing puts a great gusher of money into the hands of existing road owners, it is inevitable that others will think about how they too might acquire more such money gushers, by building more roads. This will even be true if, as I strongly urge, the vile and barbaric practice of the compulsory purchase order were to be abolished along with the abolition of publicly owned roads. Even with that great leap towards political civility, certain potential roads will add up to a string of offers too lavish for those in the direct path of them to refuse. There is now an elevated section of the M4, joining the London metropolis to the rural west of England. It is very, very popular. If its owners charged for drivers to use it, it would surely remain rather popular, particularly at very popular times like Friday evening, and also become very lucrative for its new owners. This Niagara of lucre will suggest to the owners that they ought to think about putting further decks of roads above the single four lane deck that
6 5 already exists, or about buying out the landowners on each side of the road, so they could widen it, or both. And it is equally certain that other roads, used by hardly anybody, will cost more to maintain than anyone is willing to pay to use them. So good riddance to them. In discussions of road pricing, the fact that entire rural villages stuck out at the far end of the back of beyond might have to be closed down is constantly offered by anti-road-pricers as some kind of final proof that these rural parasites need free roads courtesy the government, and should accordingly have them. And I need a stately home crammed with servants for when I get bored with working. ROAD PRICING WILL ENCOURAGE OTHER FORMS OF TRANSPORT BESIDES CARS Another reason why some leftists like the idea of road use pricing is that road use pricing will encourage public transport. Yes it will, sort of. It will encourage buses and railways. That s the good news for the leftists. The bad news is that road pricing will encourage buses and trains by making buses and trains profitable, which means that buses and trains will not need to be run at a loss by the government, in the preferred leftist manner. Public transport will mutate into yet another triumph for private enterrprise. I share the strong leftist hunch that it is deeply inefficient to dole out ever more cubic mileage of concrete and tarmac for saloon car users, thereby clogging up bus services and rendering unprofitable the train services which now compete with the subsidised road-monster, thereby encouraging yet more car use, thereby clogging up bus services and discouraging train services even more, and so on in a vicious circle. But road use pricing will stop all that at once. Twenty people in a bus, even if each is individually poorer than the average motorist, will together outbid all but the most determined and free spending motorist for the use of the same piece of road, and so there ll be a general tendency for buses to do relatively better compared to cars than they do now. They will simply buy their way through the city s traffic. To put it another way, the individual motorist will have to think much more clearly than he does now about the true cost of his solitary driving, not just in the form of road building and house demolition, but also in the form of the collective costs he imposes upon others in the form of the bus journeys he impedes. Or to put it yet another way, road owners, when they contemplate a string of cars, will ponder how much more money they might make if they could only encourage people to travel in large lumps, in buses. In all twentieth century markets where the numerous poor have been allowed to club together and bid against the less numerous and hence collectively less rich rich, the poor have more than looked after themselves. It is the rich who have wrung their hands and moaned about lowest common denominators, and the relatively poor who have celebrated all the way to the shopping centre. Twenty first century transport need be no different. All that is required is a true market in transport, which does justice to all the costs incurred. We have a market in cars and buses, but the absence of a market in road use means that the cars are designed to screw up the road system ever more prettily and comfortably and economically, rather than to fit together to form a sensible road system. Most fundamentally of all, people who now thoughtlessly drive cars will be persuaded to think more carefully about whether they really want to travel at all, given that it will now cost them what it is truly costing everybody else. Given the costs in queueing and chaos already incurred by all who attempt regular use of London s present shambolic transport system, many Londoners in recent years have resorted to working at the far end of electric wires that transmit telephone, fax and computer messages. I avoid most travel of any kind except walking by (a) living in central London rather than in the suburbs or beyond, and (b) by doing most of my work in my kitchen, helped by those wires. Road use pricing will undoubtedly intensify such arrangements. ABOVE AND BELOW THE SURFACE OF THE ROAD Roads are not merely areas, they are volumes. Consider the vexed question of clearances. Consider the miracle of how few inches of air are wasted by trains, how perfectly, that is, tube trains fit into their tubes. Volume being at such a premium, at any rate in cities, I surmise that roads will, if priced, be constructed with much more exact concern about how high the space has to be above their mere surface. Don t forget that a bridge that has to go up twice as high takes a lot more than twice as much concrete and space to do it. In this respect at least, cars may turn out to be not nearly so wasteful compared to buses as is now supposed. Would it make sense to build certain roads with a height limit of nearer five feet than fifteen, only negotiable by standard size saloon cars? Might there be roads with even lower clearances, used only by three-and-a-half foot high sports cars? I envisage cunning little roads for the benefit of Harrods customers, inexpensive both in terms of supporting structure (the vehicles being relatively light) and in terms of volume of city consumed (the vehicles being only so high). In particular, I suspect that the present self-satisfied manner in which we British boast about our double decker buses is almost certainly an error. A double decker bus, in order to make progress, must have a huge cavern of road dug for it wherever it roams. If double decker buses made sense, still, in modern cities, then why have we not switched to double decker trains? Because double decker trains would be daft is why. So how come double decker buses are not daft? When was that decided? And what of the volume under the road? Road pricing will necessarily involve lots of wires travelling all over the place, and modern life already involves more and more wires, tubes and subterranean walkways with every passing decade. One of the biggest sources of economic miscalculation in our present world, aside from the non-pricing of road use by cars, is the non-pricing of road use by the owners and operators of other infrastructures of the sort usually buried under the roads. Sewers, telephones, water supplies, gas. Just like car shifters, all such enterprises should likewise have their various minds concentrated on the costs they are imposing on the rest of us.